Editorial: Travelling public not best served

Questions about the New Zealand landing rights of the Dubai-based airline Emirates highlight the abnormality of the Ministry of Transport's current lot. Its normal line of work includes policing international aviation pacts, a process that requires it to look after the interests of the national carrier. Yet now, courtesy of loophole-seeking legal minds, it has also become the competition agency for the Air New Zealand-Qantas transtasman code-sharing agreement.

Quite how the best interests of the travelling public will be served when a decision is made on this cosy arrangement has become impossible to fathom.

As much has been emphasised by the ministry's approach to Emirates. Travellers have come to value the airline's transtasman fares. Air New Zealand and Qantas, for their part, claim it and Pacific Blue can be relied on to constrain their own activities should they gain approval to collude on capacity, scheduling and fares, and carve up revenue on their Tasman routes. Yet the ministry, in reviewing the nature of Emirates' operations, has severely diminished that claim.

Its purview comes courtesy of outmoded rules that govern the airline's presence. Emirates' right to operate here is contingent on it "not unduly" affecting Air New Zealand's interests. It is expected to cater to and foster traffic between New Zealand and the Gulf. This has not happened; the airline's New Zealand service relies to a substantial degree on transtasman traffic.

That, of course, is wholly predictable and in keeping with similar airline operations around the world. The agreement dates from a time before New Zealand recognised, and embraced, the possibilities of competition. It was one of the last to include serious constraints. Nonetheless, this has not prevented the ministry, on behalf of Air New Zealand's interests, telling Emirates to "bear in mind" the agreement's principles and to "do more to focus on travel between New Zealand and the Middle East".

This is as far as the matter has gone. But it is not a persuasive commentary on the ministry's concern to give the customer, and transtasman fares, due priority. Nor does it indicate that the ministry comprehends the vital role that Emirates plays, and the potentially tenuous nature of its operations here.

Yet this same body will advise Cabinet minister Pete Hodgson, who will deliver the verdict on the Air New Zealand-Qantas code-sharing proposal. Normally, assessing the airlines' plan would fall to the Commerce Commission, which would almost certainly reject it. It has ended up with the ministry because of 20-year-old provisions in the Civil Aviation Act that were designed to ensure Air New Zealand did not become ensnared in the Commerce Act. Given that the airline is 80 per cent owned by the Government, which has voiced its wish for closer ties with Qantas, that is hardly an arm's-length proposition.

The exemption that has allowed Air New Zealand and Qantas to sideline the commission is as inappropriate as the pact governing Emirates' operations. One has already been used to advantage by the Anzac airlines; the other offers latent possibilities. Both, in their own way, underline why an effective merger of the two airlines' transtasman operations should not be approved. Emirates can hardly be a constraint if its own operations could be constrained.

The ministry has neither the expertise nor experience to stand as a competition authority. It is reporting to a minister whose colleagues want the code-sharing agreement approved. That the plan must also be approved by Australia's Competition and Consumer Commission seems the travelling public's last hope.